Economic Growth – Page 8 – artdiamondblog.com

Business Cycles Can Be Moderated

Source of graph: online version of the NYT article quoted and cited below.

(p. B2) It’s tempting to think of an economic expansion as being like a life span. The older you get, the closer you are to death; a 95-year-old probably has fewer years left to live than a 60-year-old. But this year Glenn D. Rudebusch, an economist at the Federal Reserve Bank of San Francisco, looked at the evidence from post-World War II United States economic expansions, and did not find that pattern held up at all.
“A long recovery appears no more likely to end than a short one,” Mr. Rudebusch wrote. “Like Peter Pan, recoveries appear to never grow old.”
Expansions don’t die of old age. They die because something specific killed them. It can be a wrong-footed central bank, the popping of a financial bubble or a shock from overseas. But age itself isn’t the problem.
A look around the world also shows plenty of examples of expansions that have lasted a lot longer than either the seven years the current United States expansion has been underway or the longest expansion in American history, from 1991 to 2001.
Britain had a nearly 17-year expansion from the early 1990s until the 2008 global financial crisis. France had a slightly longer expansion that ended in 1992. And the record-holders among advanced economies in modern times, according to the research firm Longview Economics, are the Netherlands, which experienced a nearly 26-year “Dutch miracle” that ended in 2008, and Australia, which has an expansion that began in 1991 and is on track to overtake the Dutch soon for the longest on record.

For the full story, see:
NEIL IRWIN. “Expansion Is Old, Not at Death’s Door.” The New York Times (Fri., OCT. 28, 2016): B1 & B2.
(Note: the online version of the article has the date Oct. 27, 2016, and has the title “Will the Next President Face a Recession? Don’t Assume So.”)

Rudebusch’s research, mentioned above, appeared in:
Rudebusch, Glenn D. “Will the Economic Recovery Die of Old Age?” FRBSF Economic Letter # 2016-03 (Feb. 8, 2016): 1-4.

Unbinding Entrepreneurs Can Create Jobs and Speed Growth

(p. A21) This week more than 160 countries are celebrating Global Entrepreneurship Week. The Kauffman Foundation, which I once led, created this event eight years ago to encourage other nations to follow the American tradition of bottom-up economic success. Yet this example has been less powerful in recent years, as American entrepreneurship has waned. Fortunately, President-elect Donald Trump has plenty of options if he wants to resurrect America’s startup economy.
Consider the economic situation that the president-elect is inheriting. Despite the addition of 161,000 jobs in October, the labor-force participation rate fell to its second lowest level in nearly 40 years, according to the St. Louis Federal Reserve. More people have joined the ranks of the chronically unemployed, slipping into poverty at alarming rates as their skills decay and dependency on public assistance grows. Considering population growth, America needs at least 325,000 new jobs every month to stanch the growing numbers of discouraged workers, according to the Bureau of Labor Statistics.
Merely bringing back factories from overseas will not solve this problem. Technology has made every factory more productive. Fewer workers make more goods no matter where they’re located. At the same time, fewer U.S. businesses are being started. New firms are the country’s principal generator of new jobs. Data from the Kauffman Foundation suggest companies less than five years old create more than 80% of new jobs every year. While the nation seems more enthusiastic than ever about the promise of entrepreneurship, fewer than 500,000 new businesses were started in 2015. That is a disastrous 30% decline from 2008.
. . .
What can President Trump do to encourage more entrepreneurship?
. . .
Government must . . . widen the scope of innovation by stepping back and letting the market find the future. By promoting trendy ideas and subsidizing politically favored companies, government dampens diversity in creative business ideas.
. . .
Mr. Trump can also reverse regulatory sprawl and cut government-imposed requirements that add to every entrepreneurs’ costs and risks. Anti-growth policies like ObamaCare and minimum-wage increases make hiring workers prohibitively expensive.
. . .
With these policies in mind, President Trump should set another goal: that his administration will create an environment that enables one million Americans to start companies every year. Such an outcome would assure his target of 4% GDP growth, as well as full employment.

For the full commentary, see:
CARL J. SCHRAMM. “The Entrepreneurial Way to 4% Growth; Trump should set a goal: fix the business climate so a million Americans a year can start companies.” The Wall Street Journal (Weds., Nov. 16, 2016): A21.

Air-Conditioning Is “a Critical Adaptation” that Saves Lives

(p. A3) Air-conditioning is not just a luxury. It’s a critical adaptation tool in a warming world, with the ability to save lives.
. . .
In our continuing research, my colleagues and I have found that hot days in India have a strikingly big impact on mortality. Specifically, the mortality effects of each additional day in which the average temperature exceeds 95 degrees Fahrenheit are 25 times greater in India than in the United States.
. . .
The effect of very hot days on mortality in the United States is so low in part because of the widespread use of air-conditioning. A recent study I did with colleagues showed that deaths as a result of these very hot days in the United States declined by more than 80 percent from 1960 to 2004 — and it was the adoption of air-conditioning that accounted for nearly the entire decline.

For the full story, see:
Michael Greenstone. “‘India’s Air-Conditioning and Climate Change Quandary.” The New York Times (Thurs., OCT. 27, 2016): A3.
(Note: ellipses added.)
(Note: the online version of the story has the date OCT. 26, 2016.)

The Greenstone study mentioned above on heat mortality in the U.S., is:
Barreca, Alan, Karen Clay, Olivier Deschenes, Michael Greenstone, and Joseph S. Shapiro. “Adapting to Climate Change: The Remarkable Decline in the Us Temperature-Mortality Relationship over the Twentieth Century.” Journal of Political Economy 124, no. 1 (Feb. 2016): 105-59.

Dignity and Equality Before the Law Unleashes Creativity in the Poor

(p. A23) We can improve the conditions of the working class. Raising low productivity by enabling human creativity is what has mainly worked. By contrast, taking from the rich and giving to the poor helps only a little — and anyway expropriation is a one-time trick.
. . .
Look at the astonishing improvements in China since 1978 and in India since 1991. Between them, the countries are home to about four out of every 10 humans. Even in the United States, real wages have continued to grow — if slowly — in recent decades, contrary to what you might have heard. Donald Boudreaux, an economist at George Mason University, and others who have looked beyond the superficial have shown that real wages are continuing to rise, thanks largely to major improvements in the quality of goods and services, and to nonwage benefits. Real purchasing power is double what it was in the fondly remembered 1950s — when many American children went to bed hungry.
What, then, caused this Great Enrichment?
Not exploitation of the poor, not investment, not existing institutions, but a mere idea, which the philosopher and economist Adam Smith called “the liberal plan of equality, liberty and justice.” In a word, it was liberalism, in the free-market European sense. Give masses of ordinary people equality before the law and equality of social dignity, and leave them alone, and it turns out that they become extraordinarily creative and energetic.

For the full commentary, see:
DEIRDRE N. McCLOSKEY. “Economic View; Equality, Liberty, Justice and Wealth.” The New York Times, SundayBusiness Section (Sun., SEPT. 4, 2016): 6.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date SEPT. 2, 2016, and has the title “Economic View; The Formula for a Richer World? Equality, Liberty, Justice.”)

McCloskey’s commentary, quoted above, is related to her book:
McCloskey, Deirdre N. Bourgeois Equality: How Ideas, Not Capital, Transformed the World. Chicago: University of Chicago Press, 2016.

Prehistoric Hunter Suffered from Ulcer-Causing Microbe

(p. A7) Microbes that once troubled the stomach of a prehistoric hunter known as “Otzi the Iceman,” who died on an Alpine glacier 5,300 years ago, are offering researchers a rare insight into the early settlement of Europe.
In findings reported Thursday [January 7, 2016] in Science, an international research group analyzed remnants of ulcer-causing microbes called Helicobacter pylori exhumed from the well-preserved mummy of the Neolithic nomad. With modern DNA sequencing technology, they reconstructed the genetic structure of this ancient microbe–the oldest known pathogen sequenced so far.
. . .
“We know he had a rough lifestyle,” said Frank Maixner at the European Academy Institute for Mummies and the Iceman in Bolzano, Italy, who led the team of 23 scientists. “We found a lot of pathological conditions.”
. . .
The researchers also determined that the bacteria had inflamed his stomach lining, indicating that the prehistoric hunter, fleeing into the icy highlands where he was shot in the back with an arrow and beaten, may have been feeling ill on the day he was murdered.

For the full story, see:
ROBERT LEE HOTZ. “Iceman’s Gut Sheds Light on Human Migration.” The Wall Street Journal (Fri., Jan. 8, 2016): A7.
(Note: ellipses, and bracketed date, added.)
(Note: the online version of the story has the date Jan. 7, 2016, and has the title “Otzi the Iceman’s Stomach Sheds Light on Copper-Age Migration to Europe.”)

The research summarized in the passages quoted above, was more fully reported in:
Maixner, Frank, Ben Krause-Kyora, Dmitrij Turaev, Alexander Herbig, Michael R. Hoopmann, Janice L. Hallows, Ulrike Kusebauch, Eduard Egarter Vigl, Peter Malfertheiner, Francis Megraud, Niall O’Sullivan, Giovanna Cipollini, Valentina Coia, Marco Samadelli, Lars Engstrand, Bodo Linz, Robert L. Moritz, Rudolf Grimm, Johannes Krause, Almut Nebel, Yoshan Moodley, Thomas Rattei, and Albert Zink. “The 5300-Year-Old Helicobacter pylori Genome of the Iceman.” Science 351, no. 6269 (Jan. 8, 2016): 162-65.

When People’s Lives Stagnate They “Often Become Angry, Resentful”

(p. 3) Benjamin M. Friedman of Harvard University, in his book “The Moral Consequences of Economic Growth” (Knopf, 2005), said that at a deep level people make judgments about the economic progress that they see in their own lifetimes, and in comparison with the progress made by the previous generation, especially their own parents. Few people study economic growth statistics. But nearly everyone knows what they are being paid. If they realize that they are doing less well than their forebears, they become anxious. And if they can’t see themselves and others in their cohort as progressing over a lifetime, their social interactions often become angry, resentful and even conspiratorial.

For the full commentary, see:
ROBERT J. SHILLER. “Economic View; Weak Economies Foment Ethnic Nationalism.” The New York Times, SundayBusiness Section (Sun., OCT. 16, 2016): 3.
(Note: the online version of the commentary has the date OCT. 14, 2016, and has the title “Economic View; What’s Behind a Rise in Ethnic Nationalism? Maybe the Economy.”)

The Benjamin Friedman book mentioned in the commentary above, is:
Friedman, Benjamin M. The Moral Consequences of Economic Growth. New York: Knopf, 2005.

Regulations Cause Sluggish Economy by Slowing Startup Creation

Source of graph: online version of the WSJ article quoted and cited below.

(p. A2) The U.S. economy is inching along, productivity is flagging and millions of Americans appear locked out of the labor market.
One key factor intertwined with this loss of dynamism: The U.S. is creating startup businesses at historically low rates.
. . .
The share of private firms less than a year old has dropped from more than 12% during much of the 1980s to only about 8% since 2010. In 2014, the most recent year of data, the startup rate was the second-lowest on record, after 2010, according to Census Bureau figures released last month, so there’s little sign of a postrecession rebound.
. . .
Rules and regulations also could be at play. Goldman Sachs economists in part blame the cumulative effect of regulations enacted since the Great Recession for reducing the availability of credit and raising the cost of doing business for small firms, making them less competitive.
. . .
There is some disagreement on whether tech firms have fallen into the same doldrums as other startups like mom-and-pop shops. Mr. Haltiwanger and colleagues at the Federal Reserve and Census Bureau find evidence they have, with significant detriment to the economy.
“It may be that we are designing things here in the U.S. as rapidly as ever,” Mr. Haltiwanger said. “We’re just not producing here. That’s not good news for U.S. productivity.”
Researchers at the Massachusetts Institute of Technology delved into state business licensing information and found somewhat different but also discouraging results. That is, tech entrepreneurs are generating good ideas and founding companies at a healthy pace, but those ventures aren’t breaking out into successful big companies.
“The system for translating good, high-quality foundings into a growth firm, that system seems to have broken,” said Scott Stern, an MIT professor and co-author of the study on startups.

For the full commentary, see:
Sparshott, Jeffrey. “THE OUTLOOK; Sputtering Startups Weigh Down Growth.” The Wall Street Journal (Mon., Oct. 24, 2016): A2.
(Note: ellipses added.)
(Note: the online version of the commentary has the date Oct. 23, 2016 title “THE OUTLOOK; Sputtering Startups Weigh on U.S. Economic Growth.” The passages quoted above include a couple of sentences that appeared in the online, but not the print, version of the article.)

“Politicized Regulatory State” Cuts Hiring and Slows Innovation

Source of graph: online version of the WSJ article quoted and cited below.

(p. A13) Sclerotic growth is America’s overriding economic problem. From 1950 to 2000, the U.S. economy grew at an average rate of 3.5% annually. Since 2000, it has grown at half that rate–1.76%. Even in the years since the bottom of the great recession in 2009, which should have been a time of fast catch-up growth, the economy has only grown at 2%.
. . .
. . . the U.S. economy is simply overrun by an out-of-control and increasingly politicized regulatory state. If it takes years to get the permits to start projects and mountains of paper to hire people, if every step risks a new criminal investigation, people don’t invest, hire or innovate.
. . .
How much more growth is really possible from better policies? To get an idea, see the nearby chart plotting 2014 income per capita for 189 countries against the World Bank’s “Distance to Frontier” ease-of-doing-business measure for the same year. The measure combines individual indicators, including starting a business, dealing with construction permits, protecting minority investors, paying taxes and trading across borders.
. . .
Most of all, the country needs a dramatic legal and regulatory simplification, restoring the rule of law. Middle-aged America is living in a hoarder’s house of a legal system. State and local impediments such as occupational licensing and zoning are also part of the problem.
. . .
There is hope. Washington lawmakers need to bring about a grand bargain, moving the debate from “they’re getting their special deal, I want mine,” to “I’m losing my special deal, so they’d better lose theirs too.”

For the full commentary, see:
JOHN H. COCHRANE. “Ending America’s Slow-Growth Tailspin; The U.S. economy needs a dramatic legal and regulatory simplification.” The Wall Street Journal (Tues., May 3, 2016): A13.
(Note: ellipses added.)
(Note: the online version of the commentary has the date May 2, 2016.)

After Infrastructure Stimulus “Japan Is Less, Not More, Dynamic”

(p. A15) To help fight . . . economic sluggishness, Japan has invested enormously in infrastructure, building scores of bridges, tunnels, highways, and trains, as well as new airports–some barely used. The New York Times reported that, between 1991 and late 2008, the country spent $6.3 trillion on “construction-related public investment”–a staggering sum. This vast outlay has undoubtedly produced engineering marvels: in 1998, for instance, Japan completed the Akashi Kaikyō Bridge, the longest suspension bridge in the world; just this year, the country began providing bullet-train service between Tokyo and the northern island of Hokkaido. The World Competitiveness Report ranks Japan’s infrastructure as seventh-best in the world and its train infrastructure as the best. But while these trillions in spending may have kept some people working, no one can look at the Japanese numbers and conclude that the money has ramped up the growth rate. Moreover, the largesse is part of the reason that the nation now labors under a crushing public debt, worth 230 percent of GDP. Japan is less, not more, dynamic after its infrastructure bonanza.

For the full commentary, see:
Edward L. Glaeser. “Notable & Quotable: Infrastructure Isn’t Always Stimulating.” The Wall Street Journal (Weds., Sept. 14, 2016): A15.
(Note: ellipsis above added; ellipsis in article title below, in original.)
(Note: the online version of the commentary has the date Sept. 13, 2016.)

The above commentary by Glaeser was quoted from the Glaeser article:
Glaeser, Edward L. “If You Build It . . . : Myths and Realities About America’s Infrastructure Spending.” City Journal 26, no. 3 (Summer 2016): 25-33.

Toy Car Gives Child with Cerebral Palsy Mobility and Control

“Madeline Hauschild, 3, is thrilled to be at the wheel of her modified toy car at the UNMC Student Life Center on Wednesday [August 10, 2016]. Cars such as Madeline’s enable children with little mobility to get around without feeling reliant on parents or siblings.” Source of caption and photo: online version of the Omaha World-Herald article quoted and cited below.

(p. 1B) Now Madeline Hauschild will be able to drive a toy car just like her brother.

On Wednesday [August 10, 2016] Madeline, 3, received a battery-operated toy car modified so that she could sit in it and make it go forward by pushing a large button on the steering wheel. Madeline, who has cerebral palsy, was one of six small children who received cars through a program overseen by the University of Nebraska Medical Center and Children’s Hospital & Medical Center.
. . .
The cars give children with little mobility the opportunity to play, explore and socialize rather than feeling stuck and dependent on parents or siblings to move them around.
. . .
(p. 5B) Cerebral palsy is a disorder that causes movement, posture and other developmental problems. Among Madeline’s challenges: She can’t walk or bear any weight on her legs.
Madeline, of Syracuse, Nebraska, smiled and pounded the button, giving her a herky-jerky ride.
. . .
“Is that fun?” Madeline’s mother, Kelly Hauschild, asked as her daughter enjoyed the erratic drive in a room at UNMC’s Student Life Center. “You do like it, don’t you?”
. . .
“I loved seeing her be able to operate it all by herself, and her smiles,” Hauschild said.

For the full story, see:
Ruggles, Rick. “Toy Cars Give Kids Vroom to Maneuver.” Omaha World-Herald (Thurs., Aug. 11, 2016): 1B & 5B.
(Note: ellipses, and bracketed date, added.)